Prior to deregulation, banks were the main source of finance for most borrowers. Typically, a borrower was required to save one-third of the purchase price of a property with the same bank that would then lend them the other two-thirds. This was a constraint on the banks that enabled non-bank financial institutions, such as building societies and credit unions, to flourish. These non-bank financial institutions lent to borrowers a higher percentage of the purchase price of the property at only slightly higher rates of interest than the banks.

Following deregulation, the banks were able to compete with the building societies and the credit unions in this market. In the light of this increasing competition and the high cost of providing information technology support, a period of rationalisation between building societies occurred, with a number of building societies converting to banks.